PUBLIC ACCOUNTS

Southland Times, Issue 21661, 24 March 1932, Page 7

PUBLIC ACCOUNTS

A BRIEF REVIEW DEFICIT OF £2,500,000 SHRINKAGE IN REVENUE STATEMENT BY MINISTER (Per United Press Association.) Wellirigton, March 23. In a statement in the House of Representatives to-day on the subject of public finance, the Hon. W. Downie Stewart said: It is my intention as soon as possible to lay before this House a financial statement giving full particulars in regard to the outcome of the public finances for this financial year and the prospective position for next financial year, together with an outline of the Government’s proposals for dealing with the anticipated situation. In the meantime, however, I propose to give honourable members some brief particulars of the position this year, based on the revenue and expenditure figures for the eleven months ended on February 29 last.

The total revenue for the eleven months amounted to £16,348,151. This amount is equal to only about two-thirds of the estimated revenue for the year, viz., £24,660,000, but the position is not as bad as these total figures appear to indicate, as the revenue from income tax is almost wholly received during March and the receipts under various interest items, transfers from reserves, etc., are not spread evenly over the year. The revenue from taxation amounted to approximately £12,409,000, of which £5,386,000 was derived from . Customs, £2,621,000 from stamp and death duties and £2,052,000 from land and income tax. As previously indicated, the Customs receipts have been lagging considerably behind the Estimate on the proportionate basis and the 11 months’ shortage is about £740,000 and the indications are that the shortage for the year will bo about £BOO,000. In regard to stamp and death duties the . relative position has improved a little during the last month or so. Even so, it is expected that the revenue for the year will be short of the estimate, probably to the extent of £250,000. As to income tax, it is not unlikely that there will be a shortage on the amount anticipated in the Supplementary Budget under this item in the neighbourhood of £500,000. Nevertheless, the. income tax has come in much better than was generally prophesied a month ago, it l>eing then anticipated that there would be a much larger shortage under this heading. As honourable members arc doubtless aware, the railway revenue has been falling off and though the board has been striving to offset this with savings in expenditure, it does not appear likely that they will be entirely successful, with the result that the net earnings will be about £lOO,OOO less than was anticipated. Post- and Telegraph profits will probably fall short of the estimate by about £160,000. Other departmental receipts will also fall short. Expenditure. On the other side of the accounts, the net expenditure for the 11 months, including imprests outstanding amounted to £22,365,833, consisting of Debt services amounting to approximately £10,224,000. Grants, subsidies and other permanent appropriations .£5,945,000. Annual notes £5,928,000. Exchange £269,000. The expenditure as a whole is fairly closely in accord with the Estimates. It is noy estimated, however, that owing to it being necessary to make a much more extensive use of treasury bills than was anticipated, and tho higher rates that had to be paid for these bills, the interest expenditure for the year will be approximately £150,000 in excess of the Estimate, Concerning tlx? annual notes, the figures indicate that the departmental expenditure throughout the year has been kept under close control and notwithstanding the careful pruning of Estimates, it is likely that a further saving of about £70,000 will be made under this heading for the year. The Budget will be further upset to the extent of the expenditure involved in exchange" which for this financial year is estimated at £370,000. Summary of Position. To sum up the position for this finanical year, it appears likely on the basis of the eleven months’ figures that the net expenditure as a whole will exceed the Estimate by perhaps £500,000, due to the increased exchange costs and additional interest just referred to. As regards revenue it will be remembered that in the main and supplementary budgets provision was made to cope with shrinkages amounting to over £6,000,000. Notwithstanding this unprecedented effort, it now seems clear that there will be a shortage of revenue of at least £2,000,000. It will thus be evident that the combined increased expenditure and shortage of revenue will produce a deficit for the year of about £2,500,000, although tho exact figure cannot, of course, be arrived at till after the close of the financial year. It is. regrettable that notwithstanding the fact that the taxpayers have borne with equanimity such heavy extra burdens in order to produce a balanced Budget, the prospective results are not more encouraging, but the position is not without some compensating features. For example, it is commonly assumed that the Government has during the last two years exhausted all its reserves arising from investment of accumulated surpluses. This is not actually the case. We have still a large amount which came from accumulated surpluses invested in discharged soldiers' settlement mortgages. These came from revenue and can legitimately be called back into revenue. The only difficulty is that at the moment they are more or less frozen and are not easily realizable. It was for this reason that authority was taken in section 7 of the Finance Act 1931 (No. 4) for liquidating such reserves by hypothecation of securities, but I do not think it expedient at the present moment to discount repayments of capital by mortgagors to the extent probably required to produce a balanced Budget.

It should not be overlooked that the deficit is much more than offset by these reserves built up out of past surpluses from the Consolidated Fund. At a later date next year I may find it more feasible to bring in some of these funds towards assisting the public finance.